business model canvas (dr. htet zan linn)

BUSINESS BUSINESS MODEL MODEL CANVASCANVAS

Idea to Business Workshop

BUSINESS IDEABUSINESS IDEA

Who does What

Whom What Outcome

BUSINESS MODELBUSINESS MODELHow Organization

creates

capturesdelivers

valuevalue

BUSINESS MODEL BUSINESS MODEL CANVASCANVAS

CUSTOMER SEGMENTATIONSCUSTOMER SEGMENTATIONS

Different groups of people or organizations an enterprise

aims to reach and serve

CUSTOMER GROUPS …CUSTOMER GROUPS …

Mass market (e.g., consumer electronics)

Niche market (e.g., supplier-buyer relationship)

Segmented (e.g., watch industry)

Diversified (e.g., cloud computing)

Multi-sided (e.g., credit card)

11CUSTOMER SEGMENTATIONS

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASCS

mass marketmass market

VALUE PROPOSITIONSVALUE PROPOSITIONS

the bundle of products and services that can create value

for a specific customer segments

22VALUE PROPOSITIONS

VALUES MAY BE …VALUES MAY BE … Quantitative (e.g., Price, Speed of Service)

Qualitative (e.g., Design, Customer Experience)

22VALUE PROPOSITIONS

VALUES SPECTRUMVALUES SPECTRUM

Newness

Performance

Customization

Getting the JOB Done

Design

Brand/ Status

Cost Reduction

Accessibility

Convenience/ Usability

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASCS

mass marketmass marketseamless

music experience

seamless music

experience

CHANNELSCHANNELS

how a company communicates with and reach its customer

segments to deliver a value proposition

Sales Force

Web Sales

Own Stores

Partner

Stores

Wholesaler

------------------------------------------------------------------Channel TypesChannel Types

---------------------------

------------------------------------------------

---------------------------

Channel PhasesChannel Phases

How do we raise aware-

ness about our

company’s products and

services?

1. Awareness 1. Awareness

Sales Force

Web Sales

Own Stores

Partner

Stores

Wholesaler

---------------------------

------------------------------------------------

---------------------------

How do we help

customers evaluate our

organization’s Value

Proposition?

2. Evaluation 2. Evaluation

Sales Force

Web Sales

Own Stores

Partner

Stores

Wholesaler

---------------------------

------------------------------------------------

---------------------------

How do we allow custom-

ers to purchase specific

products and services?

3. Purchase3. Purchase

Sales Force

Web Sales

Own Stores

Partner

Stores

Wholesaler

---------------------------

------------------------------------------------

---------------------------

How do we deliver a

Value Proposition to

customers?

4. Delivery4. Delivery

Sales Force

Web Sales

Own Stores

Partner

Stores

Wholesaler

---------------------------

------------------------------------------------

---------------------------

How do we provide post-

purchase customer

support?

5. After sales 5. After sales

TRICKTRICK

To find the right balance between the

different types of channels to integrate

them in a way to create a great customer

experience, and to maximize revenue

Customer Segments, Value Proposition and

Channels

33CHANNELS

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASVP CR CS

Apple comApple com

retail storesretail stores

Apple storesApple stores

seamless music

experience

seamless music

experience

Customer RelationshipsCustomer Relationships

44CUSTOMER RELATIONSHIPS

CR - CR - CUSTOMER CUSTOMER RELATIONSHIPSRELATIONSHIPS

Types of relationships a company establishes

with specific customer segments

Range from Personal to Automated

TYPES OF CRTYPES OF CR Personal assistance Personal assistance (human interaction)

Dedicated personal assistance Dedicated personal assistance (customer representative)

Self-serviceSelf-service (no direct relationship with customer)

AutomatedAutomated (self-service with automated processes)

CommunitiesCommunities (connections between community members)

Co-creation Co-creation (beyond the traditional customer-vendor relationship to co-create values with customers)

Building Strong with Customer Segments, Value

Propositions and Channels

112233

i Tunes storei Tunes store

Apple comApple com

lovemarklovemark

switchingcosts

seamless music

experience

seamless music

experience

REVENUE STREAMSREVENUE STREAMS

1122 33

55REVENUE STREAMS

REVENUE STREAMSREVENUE STREAMS

1. Transaction revenues resulting from one-time customer payments

2. Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support

There are several ways to generate Revenue Streams:

Asset sale

Usage fee

Subscription fees

Lending/Renting/Leasing

Licensing

Brokerage fees

Advertising 5555

Some music

revenuesSome music

revenues

largehardwarerevenues

Apple comApple com

lovemarklovemark

switchingcosts

seamless music

experience

seamless music

experience

KEY RESOURCESKEY RESOURCES

The Key Resources Building Block describes the most

important assets required to make a business model work

1122 33

66KEY RESOURCES

Key Resources can be categorized as follows:

Physical

Intellectual

Financial

Some music

revenuesSome music

revenues

Apple comApple com

lovemarklovemark

switchingcosts

i Tunes softwarei Tunes

software

i Pod hardware

Apple brandApple brandPeoplePeople

seamless music

experience

seamless music

experience

KEY ACTIVITIESKEY ACTIVITIES

The Key Activities Building Block describes the most important

things a company must do to make its business model work

1122 33

77KEY ACTIVITIES

Key Activities can be categorized as follows:

Production

Problem

Solving

Platform/

Network

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASKA VP CR CS

Some music

revenuesSome music

revenues

Apple comApple com

lovemarklovemark

switchingcosts

software

i Pod hardware

Content &

agreementsContent &

agreements

marketingmarketing

hardware design

seamless music

experience

seamless music

experience

KEY PARTNERSHIPSKEY PARTNERSHIPS

The Key Partnerships Building Block describes the network of

suppliers and partners that make the business model work

1122 33

88KEY PARTNERSHIPS

We can distinguish between four different

types of partnerships:

1.Strategic alliances between non-

competitors

2.Coopetition: strategic partnerships

between competitors

3.Joint ventures to develop new businesses

4.Buyer-supplier relationships to assure

reliable supplies

88KEY PARTNERSHIPS

3 motivations for creating partnerships

1. Optimization and economy of

2. Reduction of risk and

uncertainty

3. Acquisition of particular

resources and activities

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASKP KA VP CR CS

Some music

revenuesSome music

revenues

Apple comApple com

lovemarklovemark

switchingcosts

OEMsOEMs

record companies

software

i Pod hardware

Content &

agreementsContent &

agreements

marketingmarketing

hardware design

seamless music

experience

seamless music

experience

COST STRUCTURECOST STRUCTURE

The Cost Structure describes all costs incurred to operate a

business model

1122 33

88COST STRUCTURE

Two broad classes of business model Cost

Structures:1. Cost-driven

2. Value-driven

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASKP

KA VP CR CS

Some music

revenuesSome music

revenues

Apple comApple com

lovemarklovemark

switchingcosts

peoplepeople manufacturing

manufacturing

OEMsOEMs

record companies

marketing &

salesmarketing &

software

i Pod hardware

Content &

agreementsContent &

agreements

marketingmarketing

hardware design

seamless music

experience

seamless music

experience

The nine business model

Building Blocks form the basis

for a handy tool, which we call

the Business Model Canvas.

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVAS

Key Partners

CostStructure

Key Activities

Key Resources

ValueProposition

CustomerRelationships Customer

Segments

Channels

RevenueStreams

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASKP

KA VP CR CS

Some music

revenuesSome music

revenues

Apple comApple com

lovemarklovemark

switchingcosts

peoplepeople manufacturing

manufacturing

OEMsOEMs

record companies

marketing &

salesmarketing &

software

i Pod hardware

Content &

agreementsContent &

agreements

marketingmarketing

hardware design

seamless music

experience

seamless music

experience

THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVAS

left brain

logicright brain

emotion

left canvas

efficiencyRight canvas

Un-Un-BundlingBundlingBusinessBusinessModelsModels

John Hageland Marc Singer, who coined

the term “unbundled corporation,”believe that companies are composed of threevery different types of businesses with differenteconomic, competitive, and cultural imperatives:

Customer Relationship businesses, product innovationbusinesses, and infrastructure businesses. Similarly,

Treacy and Wiersema suggest that companiesshould focus on one of three value disciplines:

operational excellence, product leadership,or customer intimacy.

Hagel and Singerdescribe the role of Customer

Relationship businesses as fi nding andacquiring customers and building relationships

with them. Similarly, the role of product innovationbusinesses is to develop new and attractive products and

services, while the role of infrastructure businesses is to buildand manage platforms for high volume, repetitive tasks.

Hageland Singer argue that companies should separate thesebusinesses and focus on only one of the three internally.

Because each type of business is driven by diΩerentfactors, they can confl ict with each other or

produce undesirable trade-oΩs within thesame organization.

On thefollowing pages we

show how the idea of unbundlingapplies to business models. In the fi rstexample, we describe the confl icts and

undesirable trade-oΩs created by a “bundled”business model within the private bankingindustry. In the second example we show

how mobile telecom operators areunbundling and focusing on new

core businesses.

Early market entry enables chargingpremium prices and acquiring largemarket share; speed is key

High cost of customer acquisitionmakes it imperative to gain large walletshare; economies of scope are key

High fixed costs make large volumesessential to achieve low unit costs;economies of scale are key

Battle for talent; low barriers to entry;many small players thrive

Battle for scope; rapid consolidation;a few big players dominate

Battle for scale; rapid consolidation;a few big players dominate

Employee centered; coddling thecreative stars

Highly service oriented; customercomes-first mentality

Cost focused; stresses standardization,predictability, and efficiency

The Private Banking ModelThe Private Banking Model

Other Product

Providers

AdviseProduct R & D

Marketing

PlatformManagement

Brand/ Trust

Product IP

Transaction

Platform

Platform Management

HR: R & D

HR: Private Bankers

Custom-TailoredWealth

ManagementServices

FinancialProducts

TransactionManagement

Management & Advisory Fees

Product & Performance Fees

Transaction Fees

PersonalNetworks

Sales Force

TransactionPlatform

IntimatePersonal

Relationship

Key AccountManagement

WealthyIndividuals& Families

Private Banks

IndependentFinancialAdvisors

Relationship BusinessRelationship Business Product Innovation BusinessProduct Innovation Business Infrastructure BusinessInfrastructure Business

Unbundling the Mobile Telco

The Long TailThe Long Tail

The Transformation of theThe Transformation of theBook Publishing IndustryBook Publishing Industry

Old Model

A New Model

LEGO®’s New Long Tail

Multi-SidedPlatforms

Google’s Business Model

Wii versus PSP/XboxSame Pattern, Different Focus

PSP/Xbox Focus

Wii versus PSP/XboxSame Pattern, Different Focus

Wii Focus

Apple’s Evolution intoa Platform Operator

FREE as aBusinessModel

(How) can you set it free?

Advertising: A Multi-SidedPlatform Model

Facebook

Free Advertising:Pattern ofMulti-SidedPlatforms

Freemium: Get the Basicsfor Free, Pay for More

Flickr

Open Source:Freemium with a Twist

Red Hat

Skype versus Telco5+ years old400 million+ users100 billion+ freecalls generated2008 revenues ofU.S. $550 million

The Insurance Model:Freemium Upside Down

“Every industry that becomesdigital eventually becomes free.”

—— Chris AndersonEditor-in-Chief, Wired Magazine

“The demand you get at a price of zero is many times higherthan the demand you get at a very low price.”

—— Kartik HosanagarAssistant Professor, Wharton

“We can no longer stand by and watch others walk off withour work under misguided legal theories.”

—— Dean SingletonChairman, Associated Press

“Google’s not a real company. It’s a house of cards.”—— Steve Ballmer

CEO, Microsoft

Bait & Hook

Bait & Hook of Free Mobile Phones

Razor & Blades : Gillette

OpenBusinessModels

Procter & Gamble:Connect & Develop

Outside-In

GlaxoSmithKline’sPatent Pools

The Connector:Innocentive

“Open Innovation is fundamentallyabout operating in a worldof abundant knowledge, wherenot all the smart people workfor you, so you better go findthem, connect to them, andbuild upon what they can do.”—— Henry ChesbroughExecutive Director, Center for Open InnovationHaas School of Business, UC Berkeley

“Nestle clearly recognizesthat to achieve its growthobjective it must extendits internal capabilitiesto establish a large numberof strategic partneringrelationships. It has embracedopen innovation and worksaggressively with strategicpartners to co-createsignificant new market andproduct opportunities.”—— Helmut TraitlerHead of Innovation Partnerships, Nestle

“Long known for a preferenceto do everything in-house, webegan to seek out innovationfrom any and all sources,inside, outside the company.”—— A.G. Lafl eyChairman & CEO, P&G

PatternsOverview Unbundling Business Models The Long Tail

Multi-Sided Platforms FREE as a Business Model Open Business Models

Customer Insights

Building Business Models on Customer Insights

Visual ThinkingThe Value ofVisual Thinking

Different

Types of

Visualization

for Different

Telling a Visual Story

business model canvas (dr. htet zan linn)

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